Australia tipped to dodge recession as growth slows
Treasurer Jim Chalmers says Australia is still expected to avoid a recession as new national accounts data today reveal the impact of higher interest rates and unsettled global conditions slowing growth.
Photo: AAP/Bianca De Marchi
The Australian Bureau of Statistics will release the national accounts on Wednesday.
Chalmers said there was still a lot of uncertainty both globally and domestically.
“The two things that matter most will be China, and the impact of these interest rate rises which are biting on family budgets and on the economy more broadly,” he said on Wednesday.
“But our expectation, our forecasts in the budget, are that the Australian economy will continue to grow but quite slowly.”
Speaking of the Reserve Bank’s decision to keep interest rates on hold in September, Chalmers said while the government welcomed the pause, it understood people were still feeling pressure.
“Our major focus is rolling out billions of dollars in cost of living support and doing that in a way that takes the edge off inflation rather than make it worse,” he said.
“Inflation is still the primary challenge in our economy and that’s why we’ve seen these rate rises.”
In the three months to March, the economy grew a modest 0.2 per cent, and 2.3 per cent on an annual basis.
Ahead of the June result, forecasters were feeling more upbeat following the release of some of the last remaining data points that slot into GDP, with the strong results enough to stamp out fears of a negative quarter of economic activity.
Commonwealth Bank updated its forecast higher in the wake of strong public demand and net exports data, with the bank pencilling 0.5 per cent quarterly growth and a 1.9 per cent lift over the year.
Economist Stephen Wu said the results would mask weakness in private demand, which includes household spending and dwelling investment.
“Instead, the pick‑up in GDP growth reflects comparative strength in the public and external sector as well as rapid population growth,” he predicted.
ANZ also upgraded its forecasts on Tuesday.
The bank’s economists are expecting a 0.4 per cent lift in GDP over the quarter and a 1.9 per cent rise on a year-on-year basis.
The national accounts report also includes measures of labour cost growth and productivity.
-with AAP
